Example of Accounting of Interorganization Transfers Within the Same Business Unit

An interorganization transfer is a trade transaction involving the movement of goods or services between organizations in the supply chain. When the transfer occurs between organizations within the same profit center business unit, the transfer is always at cost and there is no intercompany invoicing.

Oracle Cost Accounting creates the trade events and they do not flow through Oracle Supply Chain Financial Orchestration.

The following is an example of accounting performed by Oracle Receipt Accounting and Cost Accounting for an interorganization transfer of goods between inventory organizations within the same profit center business unit.

Scenario

Inventory organization M1 makes a transfer of goods to inventory organization M2. Both inventory organizations are under the profit center business unit US West, which is under the legal entity US Inc.

Interorganization Transfer

The cost of goods transferred from M1 to M2 is USD 50 plus overhead of USD 10.

Analysis

Receipt Accounting and Cost Accounting create accounting entries for the transfer of goods.

The following figure illustrates those accounting entries.

Accounting Entries

Receipt Accounting generates distributions under business unit US West and inventory organization M1. Cost Accounting generates distributions under cost organization CO1 and inventory organization M1.

The following table describes the cost accounting entries.

Subledger	Event Type	Accounting Line Type	Amount in Functional Currency +Dr/-Cr	Functional Currency	Cost Element	Basis of Amount
Cost Accounting	In-Transit Shipment	Trade In-Transit	50	USD	Material	Current Cost
Cost Accounting	In-Transit Shipment	Trade In-Transit	10	USD	Overhead	Current Cost
Cost Accounting	In-Transit Shipment	Inventory	-50	USD	Material	Current Cost
Cost Accounting	In-Transit Shipment	Inventory	-10	USD	Overhead	Current Cost
Cost Accounting	Trade In-Transit Issue	Interorganization Receivable	60	USD	Material + Overhead	Current Cost
Cost Accounting	Trade In-Transit Issue	Trade In-Transit	-50	USD	Material	Current Cost
Cost Accounting	Trade In-Transit Issue	Trade In-Transit	-10	USD	Overhead	Current Cost

Receipt Accounting generates distributions under business unit US West and inventory organization M2. Cost Accounting generates distributions under cost organization CO2 and inventory organization M2.

The following table describes the receipt and cost accounting entries.

Subledger	Event Type	Accounting Line Type	Amount in Functional Currency +Dr/-Cr	Functional Currency	Cost Element	Basis of Amount
Receipt Accounting	Trade Receipt Accrual	Trade Clearing	60	USD	Not Applicable	Sending Organization Cost
Receipt Accounting	Trade Receipt Accrual	Interorganization Payable	-60	USD	Not Applicable	Sending Organization Cost
Cost Accounting	Trade In-Transit Receipt	Trade In-Transit	50	USD	Material	Sending Organization Cost
Cost Accounting	Trade In-Transit Receipt	Trade In-Transit	10	USD	Overhead	Sending Organization Cost
Cost Accounting	Trade In-Transit Receipt	Trade Clearing	-60	USD	Material + Overhead	Sending Organization Cost
Receipt Accounting	Interorganization Receipt	Receiving Inspection	60	USD	Not Applicable	Sending Organization Cost
Receipt Accounting	Interorganization Receipt	Trade In-Transit	-60	USD	Not Applicable	Sending Organization Cost
Cost Accounting	Interorganization Delivery	Inventory	50	USD	Material	Sending Organization Cost
Cost Accounting	Interorganization Delivery	Inventory	10	USD	Overhead	Sending Organization Cost
Cost Accounting	Interorganization Delivery	Receiving Inspection	-60	USD	Material + Overhead	Sending Organization Cost